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Willmar School Board may need to borrow money because of shutdown

WILLMAR -- The Willmar School Board will discuss borrowing $3.5 million to maintain a positive cash flow while state government is shut down.

The board will meet at 4:30 p.m. Monday in the board room on the first floor of the Willmar Education and Arts Center.

The possibility of a substantial school funding shift has been included in several budget proposals since late June. Legislative leaders and Gov. Mark Dayton have been meeting to try to reach a settlement on a new two-year budget for the state. Much of state government has been shut down since the new fiscal year began on July 1.

The shift occurs when the state keeps a portion of school districts' state aid until the following fiscal year. In effect, the state takes an involuntary, interest-free loan from public schools. Most school districts receive more than three-quarters of their funding from the state.

The state's public schools have lived with the shifts for years. Over time, the shift has been different amounts.

For some time, the shift was an 80-20 split, meaning school districts received 80 percent of their aid in the fiscal year where it was budgeted and 20 percent in the following fiscal year.

For a time, the shift was 90-10, and currently it's 70-30. Recent talks have mentioned a 60-40 shift going forward.

"The big question is, what are the shifts going to be?" said Willmar Business and Finance Director Pam Harrington. "Anything worse than 70-30 is going to have a negative impact."

Harrington said cash flow is a concern if more than 30 percent of state aid is withheld. "We are using reserves now to get through this time period," she said. "We need to be able to make payroll."

School districts participate in large pools to sell aid anticipation bonds each year before school starts.

Willmar has not participated for five years, but the idea of selling $3.5 million in bonds will be discussed Monday. The interest rate is expected to be low, but Willmar's share of the cost of issuing the bonds will be about $11,500. The district has an annual budget of about $42 million.

Compounding the problem for schools is the shutdown's impact on state aid payments. A court order has kept the largest portion of state aid coming to schools, but some smaller payments may not come during the shutdown.

It's difficult to get specific information, Harrington said. Just six people are still working at the Minnesota Department of Education, and much of its website information is inaccessible.

When she speaks to the board Monday, she said, she will talk about the impact the state's budgeting and accounting practices are having on school districts.

School officials are becoming more concerned as the shutdown goes on, Harrington said. Earlier in the summer, people familiar with the situation at the State Capitol speculated that a shutdown could last until September. Now, some are talking about January, when the next legislative session begins.

"It's hard to negotiate" with unions when no one has details about spending or policy changes that might be in the new budget, she said.

In addition to discussing aid anticipation borrowing, the board will hear an update on the state shutdown from Superintendent Jerry Kjergaard and will consider approving a contract to provide school lunches for the Community Christian School of Willmar.

The board will discuss a timeline and amount for an operating levy election planned for November. An extended state shutdown could affect the district's preparations for the levy.

Board meetings are shown live on Willmar local cable access channel 18 and are shown later on channel 19.

The board will listen to public comments related to agenda items at the beginning of the meeting. Those who want to comment on issues not on the agenda may do so at the end of the meeting.

Linda Vanderwerf

I cover education issues for the West Central Tribune and have worked for the paper since 1995. I have worked in journalism since 1981.

Follow me on Twitter: @lindavanderwerf

(320) 214-4340